GATINEAU – Do customers want more choice or more channels? Are the two questions mutually exclusive?
If that sounds like an odd pair of questions because choice and channels can’t be unlinked like that, hear us out, because those two queries are what repeatedly sprung to mind reading the progress reports submitted to the CRTC by Bell Canada, Shaw Communications, Rogers Communications and Vidéotron on the vertically integrated companies’ moves to allow more programming choice and flexibility for their customers.
When it released its new policy on vertically integrated media and distribution companies last fall, the CRTC gave the big four mentioned above instructions to “report by 1 April 2012 on how they have provided consumers with more choice and flexibility in the services that they can subscribe to, while at the same time providing them with the ability to only pay for the services they want to watch, such as a pick-and-pay model.”
For Vidéotron, this was an easy exercise, as it re-informed the Commission that it already offers a pick-and-pay model (noting in its short reply that seven out of every 10 new customers select their TV channels that way).
While both Bell and other Quebec BDUs offer the same flexibility in that province, no other provider in the rest of Canada offers pick-and-pay. Shaw Cable comes closest with its “Plan Personalizer” where customers receive a somewhat smaller basic service, new theme packs, some pick-and-pay, and free HD versions of SD services on basic.
However, the country’s largest distributor objects to the entire premise that VI companies need some sort of additional regulation to force them to package channels in a more flexible manner. “Shaw strongly disagrees with the additional basis for the Commission’s request for this report. Specifically, the Commission states that ‘consolidation and vertical integration taking place in the Canadian broadcasting industry could have a considerable negative impact on consumer choice.’ On the contrary, Shaw and other VI entities are leaders in investment and innovation to serve customers,” reads its submission.
“Our digital investments and efforts to serve customers that are described in this report – and indeed vertical integration itself – are direct responses to increasing competition from both regulated and unregulated sources. Investment and innovation by strong companies like Shaw are vital to the ongoing success of the system in a highly-competitive and increasingly borderless digital environment. These efforts should be supported by decreased regulation – not undermined by increased regulation.
“Any suggestion that vertical integration poses a threat to the system or to consumers is simply incorrect. We remain concerned that such a view could lead to harmful and unnecessary additional regulation and Commission intervention. We are particularly concerned with the potential development of an asymmetrical regulatory framework – in respect of either VI and non-VI entities or regulated and non-regulated companies. We note that non-VI entities are not required to submit this report and non-regulated foreign companies have complete flexibility to serve Canadian customers without any regulatory oversight.”
The Rogers contribution to this process concentrated heavily on its market trial of pick-and-pay in London, Ont., the results of which were redacted in the version of the submission made public. “The London trial was initially conceived as a way to address customer churn,” reads the Rogers report. “We wanted to provide customers who are frustrated with pre-assembled packages with an option, other than having them downgrade to the basic service or cancel cable service altogether.”
However the test there evolved from purely a retention tool into an attempt to attract new customers. It worked, according to Rogers, but not without some difficulties, the details of which were redacted, however. “We also learned that the message of choice and control was attractive enough to bring new subscribers to Rogers who had not previously chosen to subscribe to a BDU service. This helped to offset some of the loss in penetration to specific specialty services,” said the company.
“(W)e learned that in an environment of greater consumer choice and control, there will be winners and losers since customers will determine the subscriber levels of each service.”
(Ed note: Two sources within Rogers have told Cartt.ca on condition of anonymity that while the trial was well-received by some Londoners, the cost to the company in terms of frequent and sometimes lengthy calls to the call centre from confused and frustrated customers made the trial more expensive and challenging that originally hoped.)
“Finally, we have learned… both programmers and distributors will have to work together to meet consumer demand; otherwise there will be contractual obstacles that would make any full scale roll out difficult if not impossible to execute.” Translation: Programmers don’t want this to go any further in English Canada than this little test.
Bell, on the other hand, pointed out to the Regulator that consumers, when faced with picking hundreds of channels one at a time, will instead opt for the easier choice of well-priced, attractively assembled packages of channels and that without such packaging, would lose access to many channels which would just go dark without the support of its package partners.
“(A) regulation requiring that all programming services must be made available to consumers on a stand-alone basis would have far-reaching ramifications on many elements of the broadcasting system. Undoubtedly, a market shake-out, causing many specialty services to exit the market, would ensue,” reads its report.
“Consumers would also face negative consequences from the demise of current packaging structures. This arises from the fact that the relatively high prices required to make many specialty services financially viable on a stand-alone basis would make them financially unpalatable to many consumers. It is because of these market dynamics that it does not make economic sense for most Canadians to buy all of their programming on a stand-alone basis,” continues its submission. “If, for example, a consumer were to buy all of his programming on a stand-alone basis on iTunes, one recent analysis showed that it would cost an average viewer over $800 per month.”
(Ed note. Yep, that’s Bell quoting us in its filing…)
Besides, the company continued, customers were offered a skinny basic with myriad choice in other packaging, but newer, simpler, larger bundles of channels are proving far more popular with its customers. “Bell is always looking for ways to serve our customers better and in this capacity, we offered, early in our licence term, a ‘skinny’ or ‘lifeline’ basic service consisting solely of Canadian channels with an emphasis on local television stations,” it says. “Our goal was to provide a low-cost entry point to television services. However, consumer demand was negligible and consequently, this packaging option was discontinued.
“Consumer choice and flexibility are multi-dimensional concepts which must be considered broadly by policy makers. The number and variety of broadcasting services offered, the number of service providers in each market and how they differentiate their services, the number and capabilities of the alternative networks and screens available, and the range of packaging configurations available from distributors – to name only a few dimensions – must all be considered,” reads the Bell submission.
“Consistent with this perspective, and as demonstrated in this report, Canadian consumers have a dizzying array of broadcasting choices and an abundance of flexibility available to them.”
